Insurance Journal Florida Supplement 2016-07-25

FOCUS ON FLORIDA Florida Insurer Withdraws Rate Increase Filing Agent Initiatives to Grow Florida Insurance Industry Florida Fraud Update

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Contents

July 25, 2016 • Vol. 94 No. 14 • Focus on Florida

Florida

6 Florida Workers’ Comp Market in Limbo as Regulators Weigh Rate Increase of Nearly 20% 10 Florida Fraud Round-Up: Florida Workers’ Comp Fraud Sting Ends with 8 Arrests Florida Construction Company Owner Nabbed in Workers’ Comp Scheme 12 AOB: A Catastrophe By Any Other Name Would Cost As Much 14 Heritage Revokes 14.9% Rate Increase Filing for Florida Homeowners 16 Florida Agents Putting New Law to Work to Attract Millennials to Insurance Careers 18 GEICO Files RICO Lawsuit in Florida Over Alleged Fraudulent Claims

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FLORIDA WORKERS’ COMP MARKET IN LIMBO AS REGULATORS WEIGH RATE INCREASE OF NEARLY 20%

AOB: A CATASTROPHE BY ANY OTHER NAME WOULD COST AS MUCH

18 Prime Property & Casualty Expands into Florida Commercial Auto Market 19 Florida Steps up Fight Against Fraud Through New Division of Investigative and Forensic Services 19 Florida Chiropractic Assistant Sentenced to 6 Months for Patient Brokering 19 Mayor of Florida City Charged with Insurance Fraud, Suspended by Governor

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HERITAGE REVOKES FLORIDA HOMEOWNERS RATE INCREASE

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Florida

Florida Workers’ Comp Market in Limbo as Regulators Weigh Rate Increase of Nearly 20%

By Amy O’Connor

R

ate increases for workers’ compensation insurance of almost 20 percent may be coming to Florida businesses next year in response to recent case decisions from the Florida Supreme Court. But the impact of those decisions is

expected to reach far beyond just first year rate hikes, according to insurance experts in the state.

The Florida Office of Insurance Regulation (OIR) announced July 1 that the National Council on Compensation Insurance (NCCI) filed an amended rate filing to address a third legal change

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affecting Florida’s workers’ comp system.

This amended filing increases NCCI’s initial proposed combined average rate increase from 17.1 percent to 19.6 percent.

NCCI is the licensed rating organization authorized to make rate filings on behalf of workers’ compensation insurance

continued on page 8

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FOCUS ON FLORIDA continued from page 6

| News & Markets

companies in Florida.

Individual projected rate impacts for all three recent legal changes include the following: • A 2.2 percent projected rate increase for the June 9 decision in Westphal v. City of St. Petersburg, in which the Florida Supreme Court found the 104-week statutory limitation on temporary total disability benefits unconstitutional because it causes a statutory gap in benefits in violation of an injured worker’s constitutional right of access to courts. The Supreme Court reinstated the 260-week limitation in effect prior to the 1994 law change.

• A 15 percent projected rate increase for the April 28 Florida Supreme Court decision in Castellanos v. Next Door Company, which found the mandatory attorney fee schedule unconstitutional as a violation of due process under both the Florida and United States Constitutions.

• A 1.8 percent projected rate increase related to updates within the Florida Workers’ Compensation Health Care Provider Reimbursement Manual (HCPR Manual) per Senate Bill 1402. The manual became effective on July 1.

NCCI is proposing an effective date of Oct. 1, 2016, for new and renewal workers’ comp policies, and that the 19.6 percent rate increase apply to all workers’ compensation policies in effect as of Oct. 1, 2016, on a pro-rata basis for the remainder of each policy’s term.

Trey Gillespie, assistant vice president, Workers’ Compensation, for the Property Casualty Insurers Association of America (PCI), said significant rate increases were expected. But the impact will reach far beyond just rates, as old claims may be reopened and there will be an increase in future disputes as well.

“The Castellanos and Westphal decisions have raised quite a bit of concern with the employer community and insurance community,” Gillespie said. “I think there is a growing consensus, at least among the business and insurance community, that there needs to be a legislative response to those two decisions.”

Gillespie said he isn’t surprised that legislators haven’t called a special session, which some expected would be the case in the immediate aftermath of the Castellanos decision — including former Insurance Commissioner Kevin McCarty.

“Because of the far-reaching impact those decisions could have on the delivery of benefits in Florida, all stakeholders are taking their time to make sure there is a fair and balanced response that addresses those concerns for the business community and costs in the marketplace, and at the same time protecting rights of injured workers. It’s a tough task,” Gillespie said.

Jeff Grady, CEO of the Florida Association of Insurance Agents (FAIA) said it remains to be seen how much of NCCI’s proposed increase will be approved

by OIR. But if the rate increase approved isn’t enough to cover the costs, there will be an “unpriced liability” for cases that were not pursued because of the attorney fee statute that was just thrown out by the state’s high court, he said.

“Before, many workers couldn’t get an attorney who would represent them, but now that liability is unknown,” Grady said.

“If you don’t get rate adequacy [from OIR], or the Legislature stumbles and doesn’t come up with a good fix, Florida’s workers’ comp market is going to get stressed.”

OIR has scheduled a public rate hearing for Aug. 16 at 9:00 a.m. in Tallahassee to give NCCI an opportunity to discuss the filing, and interested parties and other stakeholders the ability to provide testimony or comments. OIR should announce not long after the hearing what the approved rate change will be.

Grady said keeping the state’s insurance market from complete turmoil “all depends on timing.”

“If we don’t get a legislative reform package that resolves this in respect to attorneys’ fees and that goes into a stalemate, and the real impact comes out slowly in terms of regulatory approval then, yes, that will throw the market in turmoil,” Grady said. “But if the Legislature gets in there and comes up with a reasonable fee schedule and OIR approves decent rates then,

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no, the market will remain stable.”

In an interview with Insurance Journal before he left OIR, McCarty said the answer for addressing the attorney fee issue doesn’t lie within the judicial system.

“We need to look at what specifically the court felt was flawed about attorneys’ fees and see if there is any reasonable way to address that, or what we can do to address injured workers seeking attorneys in the first place,” he said. “If the burden to assist them lies on the judiciary system, that will be prohibitively expensive for businesses and prohibitively expensive for the system.”

Grady said how the Legislature will address the new stresses to the state’s workers’ comp market is still unclear, but he thinks an attorney fee schedule that is not so absolute is a good place to start.

Ultimately, the Legislature needs to come up with a solution they can agree on.

“Just from an economic development impact on the state, we have to have a stable workers’ comp market — that means [the Legislature] will take it up next session,” Grady said. “Whether the two sides can agree and there is a compromise legislators’ will vote on … that’s another question.”

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FOCUS ON FLORIDA

| Fraud Round-up contracting. Perdue carried adequate workers’ compensation coverage but failed to hold a business license. He was charged with unlicensed contracting and was also booked into Polk County Jail.

These cases will be prosecuted by the State Attorney Office in the 10th Judicial Circuit. If convicted, all eight perpetrators face up to five years in prison, more if found to be a repeat offender.

Florida Workers’ Comp Fraud Sting Ends with 8 Arrests

A multi-agency undercover workers’ compensation sting in Polk County, Fla., led by the Florida Department of Financial Services’ (DFS) Division of Insurance Fraud (DIF) ended with eight arrests, according to a statement from DFS on June 21.

The eight individuals caught in the scheme allegedly advertised their ability to perform wide-ranging plumbing and electrical work without proper licenses or training, and without having workers’ compensation coverage to protect their employees in the event of an accident or injury.

During the three-day operation, DIF detectives, accompanied by logistical and tactical support from multiple agencies, established an undercover sting in an effort to stop the illegal practice.

Detectives responded to public advertisements allegedly created by the defendants, requesting that they perform services at a specified location in Lakeland.

Those who were arrested include: Justin Cortes;

Greatlen Bozeman; Herbert Vanegas; Henricus Van Der Linden; Stuart Rhodes; Juan Carlos Diaz; Raymond Figueroa-Garcia; and Raymond Perdue.

Multiple agencies participated in securing the sting’s successful outcome, including the Lakeland Police Department, State Attorney’s Office, DFS’ Bureau of Workers’ Compensation Compliance, and the Department of Business and Professional Regulation.

“Unlicensed contractors lack the necessary training, qualifications and insurance to complete a job in compliance with building codes and often leave consumers responsible for additional costs to repair substandard work. At DBPR, we’re committed to bringing these unlicensed individuals into compliance with the law and mitigating the potential for consumer harm,” said DBPR Secretary Ken Lawson.

Of the eight individuals arrested, seven were booked into Polk County Jail on charges of workers’ compensation fraud and unlicensed

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Florida Construction Company Owner Nabbed in Workers’ Comp Fraud Scheme The owner of a construction company in Naples, Fla., was arrested in May for an alleged workers’ comp scheme, according to an announcement from Florida CFO Jeff Atwater.

Raimundo HernandezArgueta, owner of Naples construction company Complete Framing Professionals (CFP), was arrested following a joint investigation by the Department of Financial Services’ (DFS) Division of Insurance Fraud and Division of Workers’ Compensation.

Hernandez faces fraud charges for allegedly misrepresenting information regarding CFP’s employee operations and payroll when applying for a workers’ compensation policy.

DFS said by doing so, Hernandez avoided at least $700,000 in workers’ compensation premium payments.

Investigators with the Department’s Division of Workers’ Compensation began investigating Hernandez in August 2013

when visits to CFP job sites led investigators to believe that Hernandez was concealing his company’s payroll amount.

Investigators later discovered that Hernandez obtained a policy through Florida United Business Association providing coverage for four employees, each with an annual wage of $50,000.

Hernandez paid $26,910 for this one-year policy.

However, job site inspections documented 108 employees during that time frame and more than $5.5 million in total earnings, grossly lower than what was reported to the company’s insurance carrier.

Workers’ compensation policies are calculated by factoring in a company’s total payroll and number of employees, along with the risks associated with the company’s field of work.

Based on CFP’s actual payroll of $5.5 million, Hernandez should have paid a premium of $728,057. As a result of his misrepresentations, Hernandez was able to illegally avoid paying more than $700,000 in workers’ compensation premium dues.

Hernandez was arrested without incident by the Collier County Sheriff’s Office and charged with workers’ compensation premium fraud, a first degree felony. He was transported to the Collier County Jail where he later posted a bond of $30,000.

This case will be prosecuted by the Office of Assistant State Attorney Erik Leontiev of the 20th Judicial Circuit and if convicted, Hernandez faces up to 15 years in prison.

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Idea Exchange

Commentary

AOB: A Catastrophe By Any Other Name Would Cost As Much

By Joseph L. Petrelli

W

ith my apologies to Shakespeare and roses throughout the world, it is time to recognize that not all catastrophes meet the definition of ISO’s Property Claim Services (PCS), the internationally recognized authority on insured property losses from catastrophes in the United States, Puerto Rico, and other U.S. possessions and territories. PCS analyzes losses from catastrophe exposure and investigates whether the damage meets the current definition of a catastrophe, i.e., an event that caused $25 million or more in direct insured losses to property and that affects a significant number of policyholders and insurers.

Implicit in the definition is that the event is an isolated, well-defined, single event that occurs over a relatively short period of time. In contrast, Merriam Webster’s online dictionary defines a catastrophe as a momentous tragic event ranging from extreme misfortune to utter overthrow or ruin.

The State of Florida has been spared major catastrophic wind events for about the past decade. However, this is true if and only if one utilizes the PCS definition of ‘catastrophe.’ If one uses the Merriam Webster definition, the catastrophe of assignment of benefits (AOB) is the quiet, wind-less catastrophe that has yet to be addressed.

In the health insurance industry,

patients routinely assign benefits to physicians, surgeons and hospitals and other healthcare providers so that the benefits of the health insurance policy can be paid directly to the healthcare service provider. This works well because the healthcare service providers and the health insurance company have pre-determined the applicable reimbursement of each type of procedure. However, in the property and casualty insurance industry, AOB is not the custom and practice.

In the context of Florida, AOB has become an epidemic in certain geographical locations, for certain types of losses. Water losses are the most common claim associated with an AOB. A simplified overview of the events leading to an assignment of benefits might be: • An insured experiences a sudden

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water loss and contacts a contractor for service; • The contractor dispatches a technician with air blowers, dehumidifiers, etc.; • The contractor requests that the insured sign a contract including an AOB. By executing an AOB, the insured assigns his or her rights under the policy to recover proceeds to the contractor; • The contractor initiates invoicing for services rendered, with invoicing often including an invoice for invoicing, setting up a file, etc.

The insurer’s first notice of the loss, and therefore the insurer’s initial opportunity to investigate the claim, affirm or deny coverage, is often the initial invoice from the contractor or its attorney. The additional costs to the insurer will now include administrative fees from the INSURANCEJOURNAL.COM

attorney for coordination of the remediation services, whether necessary or not at the level of services applied or whether the incident was even covered.

In the event of the wide spread utilization subsequent to a catastrophe, all bets are off on the adequacy of the reinsurance coverage purchased by carriers. Each of the various catastrophe models, none perfect, are the science we have today and incorporate all that has been learned over the last 100-plus years to understand the scope and cost of property damage from varying events.

The threat to Florida is the use of assignments that transfer from insureds to contractors, lawyers and public adjusters claim benefits and then have those assigned the benefits work to maximize rather than minimize the damages.

If this is not brought under control by the Legislature, a $40 billion event, such as Andrew, could be magnified two to three times to $80 or even $100 billion when additional yet unnecessary legal and settlement costs have been added to the cost of the insured’s covered damages. None of the models currently factor in the abuse of one way legal fees assigned to those motivated to maximize costs and expenses rather than restore insureds to their pre-loss condition.

Unquestionably, the Florida domestics have purchased sufficient reinsurance to pay the actual property damage losses experienced by the worst events in Florida history. This is the opinion of Demotech and has been independently verified by the Office of Insurance Regulation.

Absent a legislative solution to the abuse of assignments of benefits, the question will be can they pay the cost of the additional, unnecessary administrative costs and litigation that follow?

Although hurricane season has been calm thus far, 2015 and 2016 have already been problematic years for insurance companies due to the assignment of benefits phenomenon. Had the wind blown, PCS would have assigned a catastrophe number to the event and we would have accurate information on

Petrelli is the president and co-founder of Demotech, Inc., a Columbus, Ohio-based financial analysis and actuarial services firm. Visit Demotech.com for additional information.

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the cost of the catastrophe. With assignment of benefits, although the cost to Floridians is more than $25 million per year, the catastrophe is that a catastrophe number was not assigned and the issue has not been resolved so as to mitigate its impact on each and every pur-

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| News & Markets

Heritage Revokes 14.9% Rate Increase Filing for Florida Homeowners

By Amy O’Connor

A

fter review by the Florida Office of Insurance Regulation (OIR) and much criticism from Florida stakeholders, Floridabased Heritage Property & Casualty Company withdrew its request for an overall 14.9 percent increase of homeowners insurance rates in the state.

The insurer, which has been one of the biggest take-out companies of Florida’s insurer of last resort, Citizens, notified OIR on July 5 that it was withdrawing its request and would resubmit a new request at a later date.

Homeowners insurers operating in Florida are subject to annual rate filing requirements and all rate filings submitted under the homeowners line of business are reviewed by OIR.

Heritage submitted its overall 14.9 percent increase for HO-3 and HO-6 policies on April 6 for all new and renewal business as of Sept. 1, 2016. The total number of Heritage’s policies that would have seen an increase was 184,339.

The rate increase filing attracted much controversy and the Florida Consumer Advocate called for a public rate hearing, though the increase was under the 15 percent threshold required by Florida law for public rate hearings.

OIR indicated through much back and forth with Heritage that the 14.9 percent rate increase filing would not be approved.

“The Office performed a thorough review of the rate filing submitted by Heritage Property & Casualty Insurance

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Company and held productive discussions with the company to address various items within the filing,” Amy Bogner, OIR spokesperson, wrote in an e-mail to Insurance Journal.

“The outcome of this review resulted in Heritage electing to withdraw the filing. The Office looks forward to working with Heritage when it resubmits the filing again and to address any concerns that may arise on behalf of the consumers of Florida.”

The insurer cited assignment of benefits (AOB) for water loss claims as the reason it was seeking such a dramatic rate increase for the former Citizens policies. In South Florida, where AOB abuse has been most rampant according to OIR data call results and insurer claims data, Heritage requested the biggest increases.

In Miami-Dade counties, Heritage’s proposed increases for HO-3 policies were as high as 22.2 percent; it requested a 25 percent increase in Martin County. In Broward and Palm Beach, the requested rate increases were 21.4 percent and 22.4 percent.

In its Q1 earnings call, Heritage indicated that severe weather events, namely tornadoes, and an increase in water loss claims with AOB, which it described as an “adverse development,” led to the jump in Heritage’s loss ratio from 32.1 percent in Q1 of 2015 to 63 percent in Q1 of 2016. In the same period, its overall combined ratio rose from 56 percent to 93.6 percent.

The increase in water losses in the Tri-County area that were represented by an attorney, public adjuster or loss consultants were significantly higher than what the company expected and estimated for the quarter.

“The number one thing that drove adverse development was litigated claims, plain and simple,” Bruce Lucas, CEO of Heritage, said on the Q1 earnings report conference call.

“These are claims that came in either attorney-repped, or were in an active litigation.

We had claims that settled. We paid the policyholder. It was a closed claim. And then they come back three to six months later with an attorney, and they want more money. Those were the single biggest drivers of the adverse development. And that’s something that you just can’t predict.”

Heritage CFO Steve Rohdes said the actual development losses were $8.3 million higher than the company had expectINSURANCEJOURNAL.COM

ed to pay in the first quarter and led the company to revise its estimated personal lines ultimate loss ratio for accident year 2015. Heritage anticipates additional cases to be reopened throughout the year and increased its loss reserve by $6.2 million as a result.

“The snowballing effect that happened in the first quarter was something far beyond what was expected,” Rohde told those on the call.

Despite these factors, Heritage reported a net income of $7.4 million for Q1 2016 and a 10 percent increase in gross premiums written as compared with Q1 2015. It also increased its total policy count to approximately 328,500.

Heritage has not yet released

its second quarter results, but it plans to announce them after the market closes on Aug. 3.

In the end, however, Heritage’s explanation for the rate increase in its 801-page rate filing was not enough to convince OIR that the increase was justified. OIR also notified Heritage on May 23 that its filing to clarify policy form language to address water losses would not be approved as submitted. OIR said the filing from Heritage was considered more restrictive than what has been approved for other insurers attempting to curb AOB abuse in water loss claims.

Citizens was the first to work with OIR to address policy language and OIR encouraged

other insurers to make what it has dubbed “me too” filings.

“While you do not have to submit the exact language approved for Citizens, the proposed language should not result in greater restrictions,” OIR said in its May 23 letter to Heritage.

Heritage did not respond to multiple inquiries from Insurance Journal about its rejected form or rate filings, but Heritage President Richard Widdicombe told the Orlando Sun-Sentinel that rates in the next filing would be “a lot less” than 14.9 percent, and probably in the 6 to 7 percent range statewide. As of press time on July 19, Heritage had yet to make its new filing.

CEO Lucas said he is “opti-

mistic” that the AOB issue will be addressed by lawmakers next session, despite their failure to do so the last four years.

The Palm Beach Post quickly praised the rate “rejection” by OIR, and slammed Heritage for the $27 million in salary, stock and bonuses Lucas is expected to earn in 2016 while at the same time saying it needs to raise rates by such a significant amount.

“The regulators did their job and worked on homeowners’ behalf. Let’s hope they do the same each and every time one of these Citizens offshoot companies comes looking to pad their profits at Florida consumers’ expense,” The Palm Beach post wrote in an editorial on July 8.

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| News & Markets

Florida Agents Putting New Law to Work to Attract Millennials to Insurance Careers

By Amy O’Connor

F

lorida insurance agents are trying to bolster the industry’s track record in attracting college graduates by employing a new state law that aligns college courses with the state’s licensing requirements.

The insurance workforce development law, passed in 2015, gives the insurance industry an opportunity to catch up with what other industries have been doing for years in training of new employees, according to Jeff Grady, CEO of the Florida Association of Insurance Agents (FAIA). The association helped design the law and is

now working on an education campaign to take advantage of the opportunity and draw attention to insurance and risk management careers.

“We are trying to help our industry with a really huge and universally-acknowledged problem of workforce shortage,” says Grady.

Grady said FAIA partnered with lawmakers to pass the law last year, a law that the industry hopes will make it easier to attract new talent to replace its aging workforce.

“We were stunned by how many trades and occupations line up to train their workforce,” Grady said. “The insurance industry hasn’t done a

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good job there, and [FAIA] just sort of stumbled into it.”

The law allows college students to waive the state personal lines agent license exam if they complete the appropriate insurance courses at an approved Florida college.

“What we have found, and so many other trades and occupations already do this, is if you go before the Legislature and show them there are jobs in this field and that you need funding and help to bring people into this trade, you will get support,” he said. “The insurance industry is late to the game.”

Grady said state colleges and the insurance industry have

embraced the new law in its first year. Eight colleges around the state offer or will soon offer a two-year associate’s degree in risk management/insurance.

The schools include Broward College, Polk State College, Santa Fe College, Seminole State College of Florida, State College of Florida, St. Johns River State College, St. Pete College and Tallahassee Community College.

Grady expects that number could increase to 11 by next year.

Broward College had 20 graduates this year and Grady estimated there are about 150 to 200 students currently enrolled in insurance career INSURANCEJOURNAL.COM

News & Markets | courses in Florida.

In May, FAIA released an e-book, “The Short Road to Long-Term Career Success” that it has made available on the website www.riskcareersfla. The book, which is available for free download, includes information on the field of risk management. Grady said the materials were developed for colleges to use to recruit students into insurance education programs.

“The e-book was really well researched to use the proper vernacular to describe the business in a way that will attract millennials so they won’t be turned off by words like ‘underwriting’ and ‘actuarial,’” Grady said. “Instead we are using words like risk

management.”

The insurance industry’s difficulty attracting young people has been well-documented, with the reasons ranging from a lack of millennials’ understanding about insurance to not knowing what career options are available to them in the industry. Grady said his group is trying to address these issues.

As part of FAIA’s effort, its Good Works Fund is matching graduates with insurance companies and agencies. But it needs help from the industry to ensure there are enough opportunities for students when they finish the programs.

“We have internships and company members who are

FOCUS ON FLORIDA

ready to accept these folks,” he said. “We have to build it a little more in some places to connect the industry with a college.”

Unlike other workforce development programs for trades such as homebuilding, these college programs are not getting any funding from the state. Through its agent and company donors, the Good Works Fund is also helping to cover the marketing costs for the programs at the schools and provide scholarships for students.

Grady said the association now needs to make sure the approved colleges are offering the highest quality programs and FAIA is prepared to step up its fundraising efforts to ensure

that is the case.

“We are not necessarily looking at more schools — now these programs have to be sustained. … We have to work really hard to make sure they are sustainable,” he said.

Grady thinks the workforce development program has great potential for the industry and a new generation of employees.

“Not all of them will finish, but of those a substantial portion will and there will be more licensees in the state who are better qualified to work in our business,” Grady said. “It’s only the beginning.”

He predicts that the program could see 500 or more students enrolled at all times in the nottoo-distant future.

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GEICO Files RICO Lawsuit in Florida Over Alleged Fraudulent Claims

G

EICO has sued five Florida companies and six known individuals engaged in what it said was a complex scheme to submit hundreds of suspected fraudulent glass repair bills for payment. In the case, Government Employees Insurance Company, et al. v. Jason Fry, et. al., filed on June 9 in the U.S. District Court for the Middle District of Florida, GEICO seeks to recover damages under the Civil RICO statutes and the Florida Consumer Protection Statutes. GEICO also seeks a declaration that any pending claims are not owed.

GEICO’s lawsuit alleges that customers’ information was taken or used without their knowledge or consent in order

to create invoices for non-existent repairs, which were then submitted to GEICO. In addition to billing for services not provided, the suit alleges that GEICO was billed for services that had no repair value and were unnecessary.

“GEICO has a zero tolerance policy when it comes to insurance fraud. Fraud against insurance companies is not a victimless crime; it hurts consumers through increased premiums and can unfairly harm the reputation of legitimate companies,” said Ryan West, GEICO’s vice president of claims. “Legislative reform in this area is long overdue.”

West added that GEICO will take decisive and immediate action against any individual seeking to commit fraud, and

this litigation represents a preview of further lawsuits that GEICO intends to file to protect its customers and the public from the harm caused by those who engage in fraud.

GEICO is a member of the Berkshire Hathaway family of companies and is the second-largest private passenger auto insurance company in the United States.

Prime Property & Casualty Expands into Florida Commercial Auto Market

P

rime Property & Casualty Insurance Inc. (PPCI) has expanded into the Florida commercial auto market as an admitted carrier specializing in insurance products for distressed and substandard risks. With PPCI, producers now have an insurance carrier to write their most difficult commercial auto risks and expand their book of business, the company said.

PPCI offers the capacity to insure any commercial auto risk class with adverse account experiences such as unsatisfactory loss experience, poor driving records or lack of insurance history.

The Florida Department of Transportation reported that

in 2015 the state had 19.7 million registered vehicles and 16 million licensed drivers making it one of the country’s largest commercial auto markets.

Among these are many commercial auto owners, employers and operators who need to

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insure their vehicles but have difficulty obtaining insurance for drivers with imperfect histories or atypical business arrangements.

“Producers have been frustrated by their inability to meet the needs of clients and

have been lobbying the Florida Office of Insurance Regulation for a market for their very hard-to-place commercial automobile business,” said Rick J. Lindsey, president and CEO of PPCI. PPCI offers coverage to all commercial auto risk classes including trucking, taxi cabs and towing operations despite circumstances like adverse loss experiences, poor SAFER scores, hazardous cargo, prior insurance cancelations and more.

PPCI handles claims in-house through its Claims Direct Access (CDA) service featuring an in-house legal team to take charge of discovery and investigation.

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Florida Steps up Fight Against Fraud Through New Division of Investigative and Forensic Services

Florida Chiropractic Assistant Sentenced to 6 Months for Patient Brokering

he Florida Department of Financial Services is enhancing its law enforcement strategy to fight fraud in the state by integrating its current units housed within DFS, according to a statement from Chief Financial Officer and State Fire Marshal Jeff Atwater.

Currently, three sworn law enforcement units operate under the direction of DFS, which is led by Atwater — the Division of Insurance Fraud, the Bureau of Fire and

ormer Tampa area chiropractic assistant Anthony Cirruzzo, who was arrested on charges of patient brokering, was convicted in June and sentenced to six months in jail, the Florida Department of Financial Services, Division of Insurance Fraud (DIF), said in a statement.

Cirruzzo was arrested earlier this year and faced trial on patient brokering charges related to the operation of West Coast Medical Management, a Tampa medical clinic he once owned.

Investigators first began looking into Cirruzzo after receiving information from multiple insurance carriers that alerted the department that West Coast Medical Management was involved in alleged insurance fraud and patient brokering activity.

Patient brokering involves the recruitment and referral of individuals to seek medical treatment in exchange for cash or other reimbursement. Based

T

Arson Investigations, and the Office of Fiscal Integrity.

To create greater efficiencies and to streamline the way the DFS does business, these units were combined into the newly-formed Division of Investigative and Forensic Services, also known as DIFS, effective July 1, the

statement said.

According to Division Director Simon Blank, the ability for the division to share intelligence and resources is paramount as DFS adjusts it methods and adapts techniques to match ever-evolving crime.

“By combining forces, we’re able to extend our reach and do more to protect the people of Florida from falling victim to acts of insurance fraud, arson or the misuse of state funds,” Blank said.

Previously housed in separate divisions, the Division of Insurance Fraud, the Bureau of Fire and Arson Investigations, and the Office of Fiscal Integrity each serve a function in Florida’s fight against fraud. The Division of Insurance Fraud investigates reports of insurance fraud that drive up the cost of insurance rates in Florida; the Bureau of Fire and Arson Investigations examines signs of arson on fire scenes; and the Office of Fiscal Integrity addresses allegations of fraud, waste and abuse involving state funds.

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on this information, DIF conducted a three-month undercover operation during which Cirruzzo paid an undercover investigator to attend the clinic.

As part of his conviction, Cirruzzo was sentenced to serve six months in the Hillsborough County Jail and ordered to pay over $5,000 in fines.

Following his prison sentence, Cirruzzo will complete four years of supervised probation. He has surrendered his professional license and has been permanently barred from working within the insurance industry. This case was successfully prosecuted

by Assistant State Attorney Michael Lennon of the 13th Judicial Circuit and tried by Judge Ashley B. Moody.

Mayor of Florida City Charged with Insurance Fraud, Suspended by Governor

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lorida Gov. Rick Scott has suspended from office the mayor of the central Florida city of Tavares after he was charged with insurance fraud.

Scott issued the executive INSURANCEJOURNAL.COM

order on July 14, one day after Mayor Robert Wolfe was arrested on the third-degree felony charge. Prosecutors say Wolfe filed false insurance claims for $9,300 regarding damage to his home, including a phony claim

that he had to vacate the home during repairs.

Wolfe turned himself in to the Lake County Jail and was later released on bail. Court records don’t indicate whether he has hired an attorney and

Wolfe did not immediately respond to an email seeking comment.

Wolfe has been mayor of Tavares since 2009.

Copyright 2016 Associated Press.

JULY 25, 2016 INSURANCE JOURNAL | FOCUS ON FLORIDA | 19

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